Exercise 3. A short forward contract on a dividend-paying stock was entered some time ago. It currently has 9 months to maturity. The stock price and the delivery price is $25 and $24 respectively. The risk-free interest rate with continuous compounding is 8% per annum. The underlying stock is expected to pay a dividend of $2 per share in 2 months and an another dividend of $2 in 6 months. (a) What is the value of this forward contract? What is the delivery price? (b) One month later, the price of the stock is $28 and the risk-free rate of interest is 9% per annum. What are the forward price and the value of this short position in the forward contract? Exercise 3. A short forward contract on a dividend-paying stock was entered some time ago. It currently has 9 months to maturity. The stock price and the delivery price is $25 and $24 respectively. The risk-free interest rate with continuous compounding is 8% per annum. The underlying stock is expected to pay a dividend of $2 per share in 2 months and an another dividend of $2 in 6 months. (a) What is the value of this forward contract? What is the delivery price? (b) One month later, the price of the stock is $28 and the risk-free rate of interest is 9% per annum. What are the forward price and the value of this short position in the forward contract